Transcript of Interview, 5AA with Leon Byner
25 March 2014
Leon Byner: The pressure to flog off state-owned assets is really on because the Feds are offering cash bonuses for the states to do it. We've seen how privatising state-owned enterprise has caused massive spikes in the cost to consumers as companies are compelled to favour shareholder interests at the expense of customers. I'm interested to find out any example where the disposing of a former state-owned business—often a monopoly, has enriched the people. It might have enriched a few directors and a few boards and shareholders, but the greater population? Ask a developer how much it costs to put power facilities into an undeveloped block and guess who ultimately pays? The argument goes governments shouldn't run businesses—they're inefficient. But efficiencies, dividends and a range of financial indicators don't necessarily take into account a very important principle.
You see taxpayers built and established telecommunication services in this country; water infrastructure, power and a range of amenities because we wanted cheap access to services to give everybody a chance to run a household or indeed to run a business so that one could compete and we seem to have gradually walked away by stealth and replaced this with a user pays system. But of course the user has already paid via taxes collected to make these things happen in the first place and there was a social obligation to maintain the assets and train apprentices who were the envy of the trades. Of course all of this has changed with privatisation. Yes, governments are inefficient, of course they are. And likely a business can do anything cheaper than a government, but if you give a monopoly to a private consortium, what do they do? They act to maximise a profit and any notion of social obligation is basically extinguished.
SA Water which is currently owned by you and me, it's managed privately but the asset is still vested in our hands, it acts like a private monopoly but it isn't. It seeks to undermine Collin Pickman, for example, who can offer non-potable water at half SA's Water's cost. It's government owned and $350 million goes back to the budget annually. But of course you feel it don't you.
So would you rather have that 350 million in private hands? Sometimes the ideology doesn't deserve necessarily the best interest of the people. It will be nice that in a discussion such as this we need to find out what's in it for us and we need the detail.
Let's talk to a senior Federal Member who of course he's a South Australian MP. Glad to have him on the show, Assistant Minister for Infrastructure Jamie Briggs. Jamie, good morning. Just for the record, what sort of guarantees or what sort of cash is on the table were the Weatherill Government to sell off SA Water? Apart from whatever the asset's worth—and some are saying 13 billion—the state budget annually is about 16 billion, 17 bill, but what kind of incentive would there be other than that money to flog it?
Jamie Briggs: Well there's none at the moment Leon and it's a story on which you are speculating—speculating on a meeting that's being held this Friday—and newspapers are entitled to speculate but there is no arrangement at this point. The Treasurer has raised this with state treasurers previously—the idea about using state government balance sheets more effectively across the country to invest in infrastructure—because state governments are utterly short of cash, so if you want better infrastructure you need to find ways for state governments and for the Federal Government to invest in upgrading, maintaining and building new infrastructure. So what we've said since we were elected and leading into the election is we'll look at a range of ways of to invest in productivity-lifting infrastructure and to ensure we get a stronger and better operating economy than what we've got at the moment.
Leon Byner: Alright, what is your personal view as to whether or not this state should sell off SA Water and if we did…
Jamie Briggs: Well it's a matter for the state government, Leon, ultimately. I don't run the state…
Leon Byner: No you don't but the Treasurer seems to be rather moved towards a position where the state should sell or consider selling. So obviously there is some kind of reason as to why and you are part of the ministry, so I'm just trying to glean what's the thinking here?
Jamie Briggs: Ultimately governments don't run things well as you said earlier and the private sector is better placed to run businesses than what the governments are. And if you look at the electricity it is more expensive to get electricity in New South Wales than it is—the price increases in New South Wales have been higher than what they have been in South Australia and Victoria and New South Wales is owned by the Government. Part of the reason for that is because the Government as you rightly pointed out just a moment ago takes the revenue from the operating [indistinct], the business and puts it against its bottom line. It doesn't reinvest in the capital and make decisions for the future. It makes decisions based on the politics of the day. And if you're running a private business you're trying to build a business which is sustainable into the future, not trying to get re-elected in a couple of years’ time. So that is how the argument is run and that's the evidence that's been shown over many years and many examples.
Leon Byner: Well, you see with electricity we've given the private companies the ability through legislation to be guaranteed a profit and that's something which—you can talk about the carbon tax, you can talk about a whole lot of other things, but the fact is—and you can talk about renewable energy and we've had a good look at this, but we've got a rule set at the moment for electricity in the private sector where they're guaranteed an income. Jamie I'm sure you'd love to run a business, our listeners would, where they're guaranteed not to lose money and make a profit via legislation.
Jamie Briggs: Well, Leon, I haven't chosen to run a business. I've chosen to go into public life and try and make the best decisions for our country…
Leon Byner: Yeah, sure.
Jamie Briggs:…and part of that is to get the infrastructure built which makes us as strong as we can be, and the reality is, Leon, that South Australia is broke. South Australia has no money. South Australia is borrowing to pay people for—disabled people their disability entitlement.
Leon Byner: Alright.
Jamie Briggs: South Australia is borrowing money to operate each day. Now, there are people in society who have the view that this is a perfectly reasonable way to run a government. We don't share that view.
Leon Byner: I don't think the public think that either.
Jamie Briggs: Well, look, some do, Leon, and that's [indistinct]…
Leon Byner: Oh, absolutely. Some do, yeah, absolutely, but the question is whether you sell an asset that's delivering—I mean, look, would you rather have—doesn't it come down to this, Jamie? You can either sell it or give it to a private entity that will probably get a little more than 335 million annually, but the Government might argue—and we'll get them on in a moment—so that that money would be better placed to be in coffers. But we're still broke, so in…
Jamie Briggs: [Indistinct] investment. But the point about that is, at what point does the Government invest in the network?
Leon Byner: Okay.
Jamie Briggs: And that is the issue, frankly, which happened with the electricity networks across the country, Leon. The reason we've seen such a huge spike in electricity prices in the last few years is, one—you're right— the carbon tax. You're dead right to identify that. You're also right to identify the Renewable Energy Target. But also because for over 20 years state governments, rather than use the revenue from their companies which they owned, operated, ETSA and what have you, put it back on the state's bottom line rather than back into the poles and wires network, and what happened was during heatwaves—and you well remember this…
Leon Byner: Yes, yes.
Jamie Briggs:…because you covered this extensively, when people in Victor Harbor or people in…
Leon Byner: Norwood, yeah.
Jamie Briggs:…anywhere in Norwood weren't able to get their power. Small businesses weren't able to run their businesses because no one had invested in the network, and so that's the counter to taking the revenue from a company—from the operating business in the first place.
But in any event, that is not a decision from me or the Federal Government. That is a decision, ultimately, for the state government to make. What we're saying is let's look at the way we can best get infrastructure built in Australia to have a stronger economy and more prosperity for all of us, Leon, what we all want.
[Continues—Ian Hunter, Water Minister]
Leon Byner: Alright, ok. Jamie Briggs, got a response to that?
Jamie Briggs: That’s just Labor Party politicking, Leon,—this is something that [indistinct]…
Leon Byner: [Talks over] Well, is it really this—there are two ideologies here. Either the belief that assets owned by the people should remain in the people's hands or they should be sold to private interests because they are better at it and there'll be a more just outcome. Isn't that the debate?
Jamie Briggs: Ian Hunter is a member of the Labor Party that sold Qantas, that sold the Commonwealth Bank. Let’s be honest about this— governments, for a very long time, have decided that the best way for business— for our economy—to operate is to allow markets to run businesses with appropriate regulatory settings.
Now, what we're saying is, there are the capaci… well, state governments are broke and Ian Hunter is part of a state government that sent South Australia broke. We need to look at ways that we can get access to additional money to invest in infrastructure. We want to upgrade South Road, for instance, Leon. We want to do both, that Darlington project and Torrens To Torrens project and we're happy to put in significant amounts—significant [indistinct]…
Leon Byner: [Talks over] Ok, Jamie, so, are we—I need to—I know that you not necessarily wanting to make policy announcements on any program and I understand that, but in general though, are we likely to see a scenario where the Federal Government will say to this government—who happens to be Labor—that we'll provide infrastructure money but the quid pro quo is you've got a flog an asset.
Jamie Briggs: No, but what we will say is you…
Leon Byner: You won't do that?
Jamie Briggs: What we are looking at doing is giving some incentives if state government uses assets to invest in infrastructure, which is a different argument altogether. We want to invest in the infrastructure, but we need to match funding from the state government which, by the way, doesn't have the money.
Leon Byner: Ok, so what do you say, Ian Hunter?
Ian Hunter: Well, again, this is a great Liberal lie. They campaign federally about rising debt and then what happens when they get into government? They're doubling the debt they borrow, and they don't talk about productive debt. It's like borrowing to buy a house. We borrow to invest in productive infrastructure which makes a return to the state. That is good long-term planning, but the liberals pretend, that all debt is bad and that's just plainly untrue.
Leon Byner: All right, well, Ian Hunter and Jamie Briggs, thank you.